Are we talkin’ CASH??? - Posted by Rick W.
Posted by Rick W. on March 04, 2000 at 05:29:12:
Hopefully you’re not thinking about paying $62,000 CASH for a house that might be worth $75,000, AFTER spending another $3,000 for a face-lift. By the time you consider your acquisition expense, repairs, holding costs, selling/advertising expense, and closing costs to sell, you’d be lucky to make $5-$8,000 NET.
Say you make $8,000 (Murphy moved away from your town and everything went exactly as planned), and you spent $67,000 to do it, that’s a terrible CASH ON CASH return.
Instead of paying cash for the property, you need to attempt to create some Owner Financed terms if you are contemplating paying that close to market value. Then, after you spend only $5,000 to make an additional $8,000, “you done GOOD!”.
I realize that the numbers might look good initially, but you need to learn a bit more about the true cost of the deal before you attend one of those “expensive” seminars, the ones you learn from YOUR mistakes instead of the mistakes of others. That’s the quickest way I know to become a FORMER Real Estate Investor.